Contractor Calculator
£325 Day Rate Take-Home Pay UK (2026/27): Is Contracting Still Worth It?
On a £325 per day rate working 232 days per year, your gross annual income is £75,400. Outside IR35 through a limited company, you’ll take home £53,592 in 2026/27. Through an umbrella company, expect £47,071. Inside IR35, that’s £46,306. At this rate, the contractor premium over a good permanent role is thinner than most people expect — and the question of whether it’s worth the hassle is genuinely worth asking.
Key facts: £325/day (232 working days, 2026/27)
- Annual gross: £75,400
- Ltd company (outside IR35): £53,592 take-home
- Umbrella company: £47,071 take-home
- Inside IR35: £46,306 take-home
- Ltd vs umbrella gap: £6,521/year
- Permanent equivalent salary: ~£55,000–£62,000
Full take-home breakdown by structure
| Ltd (outside IR35) | Umbrella | Inside IR35 (Ltd) | |
|---|---|---|---|
| Gross fee income | £75,400 | £75,400 | £75,400 |
| Employer NI | -£1,136 | -£10,560 | -£10,019 |
| Apprenticeship Levy | — | -£377 | — |
| Umbrella margin (2%) | — | -£1,508 | — |
| Corporation Tax | -£12,599 | — | — |
| Dividend tax | -£8,073 | — | — |
| Income tax | £0 (on salary) | -£12,614 | -£11,805 |
| Employee NI | £0 (on salary) | -£3,270 | -£2,670 |
| Take-home | £53,592 | £47,071 | £46,306 |
The £6,521 gap between Ltd and umbrella is significant — but after accountancy fees of £1,500–£2,500, the net advantage narrows to around £4,000–£5,000/year. That’s about £80–£95 per week for the added responsibility of running a company.
Is contracting worth it at £325/day?
This is the question the rate genuinely forces. At £53,592 take-home, you’re doing better than a £58k permanent salary net (roughly £41,000 after tax and NI) — but not by as much as the headline rate suggests when you factor in what you give up:
| Benefit | Permanent value | Contractor equivalent |
|---|---|---|
| 25 days holiday | ~£5,865 (at £325/day) | Unpaid — you bear the cost |
| Employer pension (5%) | ~£2,750 (on £55k salary) | Fund yourself |
| Sick pay | £750–£1,500 | None |
| Job security | High | Low — contracts end |
Factoring these in, the £55,000–£62,000 permanent-equivalent for a £325/day contractor is genuinely close to what a good permanent role in the same discipline pays. Below about £300/day, the financial case for running a limited company essentially disappears. At £325/day, it’s marginal — especially for short contracts.
The argument for contracting at this rate isn’t primarily financial. It’s about flexibility, variety of work, and the option to move between clients. If those things matter to you, the numbers still stack up. If you want simplicity and stability, a permanent role may be comparable financially.
Where most of your dividends fall
At £325/day, the dividend picture is straightforward — almost all of your dividends sit in the basic rate band, which means a relatively low dividend tax rate of 10.75%.
| Dividend tranche | Amount | Rate | Tax |
|---|---|---|---|
| Dividend allowance | £500 | 0% | £0 |
| Basic rate band | £37,200 | 10.75% | £3,999 |
| Higher rate band | £11,395 | 35.75% | £4,074 |
| Total dividend tax | £49,095 | £8,073 |
Your total income of £61,665 (salary + dividends) puts just £11,395 of dividends into the higher rate band. Compared to a £500/day contractor paying £18,741 in dividend tax, you’re in a much lighter position. Pension contributions matter less urgently at this income level — though even here, a £5,000 employer pension contribution saves roughly £1,500 in combined tax.
The inside-IR35 reality at £325/day
If your contract is inside IR35, the take-home drops to £46,306 — only £13,286 more than a £55,000 permanent salary (which nets around £33,000). Once you subtract accountancy costs, PI insurance, and unpaid holiday, you may genuinely be better off taking the permanent role.
Public sector contracts at this rate are almost always inside IR35. Before accepting an inside-IR35 role at £325/day, it’s worth modelling whether a £55,000–£60,000 permanent offer in the same organisation would leave you with a similar or better net position after benefits. Check your IR35 status →
Year-on-year comparison
| Tax year | Ltd (outside IR35) | Change |
|---|---|---|
| 2025/26 | £54,356 | — |
| 2026/27 | £53,592 | -£764/year |
The £764 reduction comes from the 2pp dividend tax increase from April 2026. At £325/day, most dividends fall in the basic rate band, so the impact is smaller than at higher rates (where more dividends spill into the higher rate band at the increased 35.75%).
How is this calculated?
Figures use 2026/27 HMRC rates: £12,570 personal allowance (not tapered — total income £61,665 is well below the £100,000 threshold), £12,570 salary, £1,136 employer NI (15% on salary above £5,000 secondary threshold), Corporation Tax with marginal relief (25% main rate minus marginal relief on profits between £50,000 and £250,000), dividend tax at 10.75% basic / 35.75% higher rate, £500 dividend allowance. Umbrella figures include 2% margin and 0.5% Apprenticeship Levy. 232 working days assumed.
Frequently asked questions
Is £325 a day a good contractor rate?
It depends on your sector and experience. £325/day is at the lower end for experienced contractors in most tech roles, but is common for junior positions, certain public sector roles, and some business analyst or project support work. Outside IR35, the take-home of £53,592 is meaningful — but at inside-IR35 rates, the financial case over a good permanent role is weak.
How much tax do I pay on £325 a day?
On £75,400 gross outside IR35, your total tax is approximately £21,808 (employer NI £1,136 + Corporation Tax £12,599 + dividend tax £8,073). That’s an effective rate of about 28.9% on gross income — considerably lower than PAYE rates because most of your income comes as dividends taxed at 10.75%.
At what day rate should I consider switching to an umbrella?
Below around £275–£300/day, the limited company tax saving over umbrella is roughly equal to the cost of accountancy and insurance — meaning the Ltd company delivers little or no net benefit. At £325/day, you’re above that breakeven point by a reasonable margin, but only just. If your contracts are short or unpredictable, umbrella simplicity may be worth the £4,000–£5,000 net difference.
Does a £325/day contractor need to register for VAT?
Probably yes. VAT registration is compulsory once your rolling 12-month taxable turnover exceeds £90,000. At £325/day × 232 days = £75,400 gross, you’re below the threshold on a full-year basis. But if you work more than 232 days or bill any other income, monitor your rolling 12-month total carefully.
Not sure if contracting at your day rate beats a permanent offer? Use our Compare Structures calculator to see the full picture across all four structures — then compare with what a permanent role in the same sector would actually pay after tax.